Contemporary market orientation research shows that in the present day business practice, many of the practitioners still face difficulties in the interpretation of the concept of market orientation besides its implementation in the organizations. The contemporary market orientation literature has therefore resulted in the rich fragmented image of the reality of market orientation. Managers ought to be informed and future academic research improved.
The origin of market orientation concept is in a management philosophy that is called the marketing concept. The concept has been the marketing implied theory of the firm and related the performance differentials that exist between firms and the degree of market orientation that they have. The concept of market orientation has been a very influential idea for managers for years. Research into the concept, however, started with the academic rediscovery of the same. The academic concept looks into the definition, measurement of the concept, the model and the implementation.
The literature does not however inform managers on the steps to take to ensure that company’s market orientation are improved. This is basically for two reasons. To start with, while academics and practitioners can link with the theme of market orientation, they often talk about the concepts that not in line with the usual definition of a market orientation. Literature offers various definitions as well as measurements of the market orientation. The various definitions further result in various implications. One can refer to market orientation in different ways and at the same time do different things all together.
Moreover, among the four issues that have been defined in connection with market orientation, implementation receives the least attention. Not much is known concerning the features of successful programs that are used in building marketing orientation.
Managerial implication of the definition, measurement and model issues
The marketing orientation concept definition leaves out the definitions and descriptions before 1988. According to some scholars, the definitions entail an external influence where the customer is the main subject. The definitions also have an obvious action feature which is being responsive to customers. The difference between the definitions given is found in the elements of organization emphasized in them. For some scholars, the emphasized element is the information-processing activities. For others, it is the decision-making process. Others still emphasize the business culture and others the organizational strategy process.
Over the years, the definitions that have been mostly used are those that emphasize the information processing activities and the business culture. Consequently, two main perspectives have emerged. One is a behavioral perspective based on the information processing activities and a cultural perspective built from the business culture definition. An integrationist perspective has been opposed by scholars Homburg and Presser.
The scholars and authors that propose the various definitions use a multi-layer model of business culture to show that the behavior of market orientation can be modeled as one layer among four of a culture based on market orientation. However, in spite of the different perspectives that include the behavioral, integrationist and cultural, many of the authors on the subject of market orientation hold the same opinion that market orientation involves elements that have everything to do with market orientation intelligence, broadcasting and use with an ultimate goal of creating value for the clients.
Organization that are market oriented can be said to be those that are well informed on the market and possess the ability to use the knowledge they have as an advantage to establish superior value for customers they set a target for. If organizations recognized the common ground as shown above, they would be in a position to defy some unfair criticism on the normative repercussions of the marketing orientation concept.
Nevertheless, it is important to recognize that the practical managerial repercussions of the literature are not clear. At a time when implementation of a market orientation is needed, the available different definitions of the concept imply different forces for improvement of the market orientation of an organization. The forces include particular behaviors of an organization. Such could include the information processing strategies, decision-making and formation of strategies.
They could also include specific skills that are necessary to enable the organizational behavior like sensing of the market and linking of customers, elements of the organizational culture that constrain that particular firm’s behavior like norms, values and beliefs. Authors that management consults determine the ideas that the latter get on focus of attention in the market orientation process.
The various definitions of market orientation go hand in hand with various scales of measurement for the construct. The most widely used scales of measurement are the Narver and Slater MKTOR scale and the Kohli and Jaworski MARKTOR scale. The two scales have been used in their original form and as foundations for adapted scales. In the MKTOR scale, there are three main elements of market orientation.
These are customer orientation, inter-functional coordination and competitor orientation. The business market orientation is the average score of the elements provided. On the other hand, the MARKOR scale carries three components namely the intelligence generation intelligence dissemination and responsiveness. Responsiveness is further composed of response design and implementation. Market orientation is the average of the three MARKOR scale components.
The two scales have faced criticism from a methodological outlook. In the criticism, three things are looked at: single informant strategy, process of scale development and common dependence on focal organization. It is also a matter of debate the usefulness of the scales as a diagnostic tool that can be used by managers. The two scales were mainly designed to assess the disparity between the levels of market orientation in various companies. The two need to meet a number of criteria in order to be useful as diagnostic tools.
One of the criteria is practicability. The other is coverage of all the significant dimensions of market-oriented behavior. In addition, they should provide managers with a conference point to decide whether a score is good or bad. The scales do not assist in setting standards and prioritizing actions to be applied in a firm.
The main issue in this is the precursor and consequences of market orientation. In addition, there are the variables which might restrain or arbitrate the connections between market orientation and the effects. According to research carried out on this, an organization’s degree of market orientation has a positive result on the financial business performance which regards to sales, market share and profitability.
The effects have also been associated with customer and employee outcomes. Market oriented firms are able to decode their information into products and services which fall under the scrutiny of customers. There is evidence of support for positive consequences on the quality as opined by customers, satisfaction and loyalty of customers. There is also job satisfaction for employees, trust in management and commitment to the organization. However, there is also a negative effect on the stress on roles.
There are a number of variables that have been introduced in the market as moderators and mediators. These are relationship in performance for instance market and technological turbulence, intensity in competition and market growth as well as the power of buyers. Researchers conclude that the moderators do not have much effect on the positive impact of market orientation on the performance of organizations. Innovativeness has been found to be a mediating variable. This means that the market-oriented firms have an advantage of knowledge over other firms they compete with. This advantage helps them to become proficient in the development of their products. Consequently, this results in positive outcomes to customers, employees and ultimately the firm.
Research has identified three processes that can foster market orientation;
- recruitment and selection of individuals that focus on the customer
- Training that is market-oriented
- Reward and compensation systems that are market oriented
On the other hand, there are 8 antecedents which include emphasis by top management on market orientation and aversion of risk, conflict and connectedness across the departments, degree of formalization, departmentalization and centralization and reliance on factors based on the market for assessment and reward. The three antecedents have been found to be important. While centralization and formalization might not be barriers to market orientation, specific strategies necessitate market oriented behavior. Strategies have therefore been referred to as the external antecedents which boost the need to take on market oriented behavior.
Antecedents in this case present forces that are significant in increasing market orientation within an organization, hence the need for managers to better understand the antecedents.
This takes a clearly managerial perspective on market orientation. It looks into what firms are required to do in order to improve their market orientation. There have been nine different approaches to implementation. The information processing approach is drawn form Kohli and Jaworski and is got from the definition they have on market orientation. Their definition is that market orientation is the generation of market intelligence across the organization and that pertain to the needs of customers in the present and in the future, the dissemination and responsiveness to that intelligence.
The norm-based approach
The approach is proposed by Lichtenthal and Wilson. It is got from a social structure perspective. It mainly focus is on interfunctional coordination. According to these authors, individual behavior is determined by norms. Organizations must therefore set norms in order for it to act in accordance with the marketing concept. The norms guide the market-oriented behavior. Change starts by defining the values that drive behavior. Then they select the values that need to be changed. Next is the phase where the firm develops a list of desired behavior. Programs are then developed in every department to change the current norms.
The proponent is Day. He developed the approach where he argues that market-oriented firms have superior marketing sense, Have a link to customers and encourage bonding. His program offers the following; diagnosis of capabilities present, expectation of future capability needs, redesigning of processes from the bottom up, direction and commitment to the process from the top down, using information and technology creatively and monitoring the process constantly. Day’s main idea is to redesign the business from the bottom up.
The approach by Homburg introduces market-oriented management. He identifies five systems of management. These are organization system, information system, planning system, planning system, controlling and human resource management systems. The author suggests that when configurations are more market oriented, there is likely to be higher performance. However he notes that this does not necessarily mean successful organization change.
Management behavior approach
Harris and others came up with this approach that focuses on the role played by cultural exchange in the implementation of market orientation. Management behavior is an important factor in implementation. Conflict and formal behavior had a negative impact on market orientation. Vertical communication is a positive contributor. Instrumental leadership is to be avoided.
From the implementation approaches available, market orientation is possible with the following factors: Structure, process design, ICT systems, Reward system, Leadership, Behavioral norms and values and competence management. The factors make it possible for managers to identify the barriers in improving market orientation and therefore determine when and how to implement market orientation.